“What is voluntary redundancy? Should I consider it?”

There are two types of redundancy: compulsory and voluntary. Both count as dismissal and so have potential employment law implications if the employer gets some aspect of the process or its decision-making wrong.

Compulsory redundancy is where the employer selects one or more employees to leave their job. It can be a difficult and time-consuming process for employers to work through, and the ‘compulsory’ aspect removes any element of choice for employees, which can be problematic. Voluntary redundancy, on the other hand – which is where employers invite employees to put themselves forward for redundancy – can enable employees to leave on terms that, to some extent, suit them.

Why apply for voluntary redundancy?

Choosing, as opposed to being forced, to leave can be beneficial for employees. Compulsory redundancy is often difficult for people to come to terms with; it can knock confidence and some people find that that chapter of their life stays with them for years to come.

Aside from the choice element, voluntary redundancy tends to result in a better financial package for an employee. Employers recognise that each voluntary redundancy is one less person to take through a compulsory redundancy process, with potentially fewer compulsory redundancies needing to be made.

Does requesting voluntary redundancy mean it will happen?

No. Employers do not have to agree to any application for voluntary redundancy. They must follow a fair and objective process in deciding which, if any, of the applications to approve. (Equally, an employee who explores the idea of voluntary redundancy could change their mind once they see the proposed deal, for example.)

How is voluntary redundancy formalised?

An employer will be keen to ensure all loose ends – including potential employment law claims – are tied up. A settlement agreement is a way of achieving this. These agreements set out the terms on which the employee will leave their job and, crucially, will confirm that the employee will not bring a claim (covered in the agreement) against their employer. There is often room to negotiate the final package and, as employment law solicitors, we frequently get involved in advising on proposals and achieving a better outcome for employee clients.

Are settlement agreements binding?

Yes, as long as they have been properly prepared. One of the key factors in this is: legal advice. The employee must have had independent legal advice on the terms and effect of the agreement and on their ability to pursue a relevant claim.

Voluntary redundancy can be a beneficial arrangement for those employees that are prepared to move on from their employment on terms that work for them. The financial impact of the loss of a job must be counterbalanced by the proposed settlement and the employee’s future prospects. For some people, the opportunity makes sense. But it’s a decision that takes careful consideration.

For advice about redundancy, or voluntary redundancy in particular, contact Julian Cole on 01264 353411 or email employment@bsandi.co.uk